With the Hollywood gold rush into China in high gear, it’s hard to tell the real players from the wannabes. In recent months, a number of film funds have announced their intent to invest in U.S. entertainment assets or initiatives on the mainland, but very few have actually inked deals.
Instead, most of the real money seems to focus at least partially on China itself, which befits the country’s mandate to build its own entertainment business by working with outside expertise. That includes construction of new China-based facilities and co-productions geared toward the Chinese and global marketplaces.
Clark Hallren, managing partner of capital-raising and advisory firm Clear Scope Partners, says that unlike hedge fund money, the coin coming from China to the U.S. is strategic, and has strings attached. “It’s trying to build businesses (in China),” Hallren say. “Many (investors) are trying to bring not only production capacity but also building technology infrastructure and know-how.”
Another challenge for U.S. operators is finding the right partner or adviser to guide Chinese investments. Navigating the labyrinthine branches of the Chinese government requires expertise and connections that many boast about but few possess.
“Early on, a number of people tried to position themselves as first movers for being that bridge (into China),” says Stephen L. Saltzman, a partner at Loeb and Loeb who specializes in Chinese co-productions and related transactions. “The interaction between the two marketplaces has grown so fast that there’s no longer … one focal person or company that you would identify as that bridge. There’s a number of them.”
Variety looks at some of the biggest Western players navigating the Chinese entertainment landscape:
DMG Entertainment: Marking the first co-production of a multibillion dollar franchise between Hollywood and China, Beijing-based DMG inked a deal with the Walt Disney Co. China and Marvel Studios to co-produce “Iron Man 3” in China. DMG, a film financier and ad shop that launched nearly two decades ago, has long been active on the mainland. Last year, the company partnered with Korean hedge fund Volton to invest $230 million to build theaters in China.
Bruno Wu: The Chinese media mogul launched Harvest Seven Stars Media Private Equity last year, with the goal of backing Chinese and global-entertainment ventures. The fund aims to raise $800 million with help from CAA, which raised eyebrows in the capital-crunched global marketplace. But Harvest Seven Stars has inked a number of high-profile deals since, including a pact with director Justin Lin to form banner Perfect Storm Entertainment. Wu, who has been compared with Rupert Murdoch for his digital, TV and print ventures, partnered with Chinese asset manager Harvest Fund Management to help put together the coin.
Skip Paul: The well-respected investment banker acted as a key adviser to Jeffrey Katzenberg on his deal to build China-based toon studio Oriental DreamWorks. Paul, a senior adviser with boutique financial firm Centerview Partners, also advised on the creation of Legendary East, the Asian unit of Thomas Tull’s shingle. Paul has more than 30 years experience working with the Chinese, and his name is often associated with transcontinental ventures.
Jeffrey Katzenberg: The DreamWorks Animation topper was more of a behind-the-scenes player in China’s expanding film biz until recently, announcing the creation of Oriental DreamWorks in February. Deal is a joint venture with state-backed orgs China Media Capital, Shanghai Media Group and Shanghai Alliance Investment, and will make animated and live-action content for distribution in China and globally. The move is one of the largest China-based production outfits launched by a U.S. company.
Imax: The Canadian company has been expanding its footprint in the Chinese exhibition biz for more than a decade, and operates more than 70 screens there. The exhib has plans for 217 to open or be contracted to open by the end of 2015, including a 75-theater joint revenue-sharing agreement with real estate giant Wanda. Imax operates a wholly owned Chinese subsidiary, Imax China, to provide a local base of operations.
Dailan Wanda Group: Real estate giant Wanda spent $2.6 billion to acquire exhibitor AMC Entertainment. The purchase also showed skeptical bizzers that real money is coming out of the mainland and into the U.S. marketplace, after numerous fund announcements and other buzz of mainland equity failed to produce more than a handful of deals. Wanda, based in northeast China, owns 86 movie theaters with 730 screens on the mainland, and has interests in production and distribution.
News Corp. and Fox Intl. Prods.: Fox has pursued the Chinese market for years, and has made steady inroads into the country’s entertainment industry. Under the leadership of FIP president Sanford Panitch, the unit struck its first deal for a Chinese co-production, “Hot Summer Days,” which became the most successful Hollywood local-language production at the Chinese B.O. when it unspooled in 2010. The group also teamed with Chinese distrib China Lion to release co-productions “The Butcher, the Chef & the Swordsman” and “Love in Space.” Separately, News Corp. bought a 19.9% stake in one of China’s largest distribs, the Bona Film Group, in May. News Corp. chairman Rupert Murdoch has expressed frustration in the past at the limitations to growth in the Chinese marketplace, and recently inked a deal to sell Chinese News Corp. assets – — including one of the largest movie libraries, Fortune Star, and a number of entertainment channels — to China Media Capital.
The Walt Disney Co.: The conglom has used its many arms to branch out in China, including consumer products and film. The company is building a Shanghai-based theme park and operates local offices to service its entertainment divisions. Disney also runs a number of language-learning centers and launched a venture to help develop toons with government-backed China Animation Group and Web portal Tencent. Disney’s “Iron Man 3” will also mark the first Chinese hero in a studio tentpole.
UTA: UTA CEO Jeremy Zimmer tapped lit agent Max Michael in early 2011 to help spearhead the agency’s efforts to make inroads in China’s media industry. Michael, a fluent Mandarin speaker, makes frequent trips to Beijing, Shanghai and Hong Kong to lead the agency’s co-production and partnership efforts in the region. UTA targets Chinese production companies and financiers on behalf of its clients, but also keeps an eye out for Chinese and U.S. consumer brands seeking cross-continental endorsements.
CAA: The agency’s Beijing office, led by Jonah Greenberg, Xiaoyan Sun and Yang Zhan, represents more than 50 artists in China, Hong Kong, Japan and Korea, including those with a global profile, like John Woo, Maggie Q and Chow Yun Fat. The agency is raising coin for Bruno Wu’s $800 million media fund, and has been involved in three of Asia’s largest co-productions: Woo’s “Red Cliff,” Rob Minkoff’s “Forbidden Kingdom” and the Will Smith-produced “The Karate Kid.” The Beijing team, which has more than a dozen employees, packages English-language co-productions in addition to local-language films.
WME/Raine Group: Former Goldman Sachs bankers Joe Ravitch and Jeff Sine founded the Raine Group, a merchant bank focused solely on entertainment, digital media and sports, in association with WME in 2009. The company spearheads WME’s efforts in China through its New York and Beijing operations, the latter of which are run by managing director Deborah Mei. Raine recently advised on Yahoo’s $7.1 billion sale of its 20% stake in Chinese e-commerce group Alibaba, ending years of speculation as to how the Internet giant would monetize one of its largest assets.
East West Bank: East West is one of the few U.S.-based banks to service U.S.- and China-based entertainment companies. Headquartered in Pasadena, Calif., East West’s lending division focuses on the U.S. and greater China, including film and television production loans as well as financing for entertainment companies. East West focuses on helping U.S. groups gain access into the mainland while simultaneously using its own Chinese relationships to help China-based businesses expand into the U.S. market.
ICM Partners: The agency focuses on production and distribution opportunities, which most recently have included Jean-Jacques Annaud’s $30 million Chinese-language drama “Wolf Totem.” While it may not have offices in China, the agency works with a number of the country’s biggest producers — including Forbidden City (a partner on “Totem”), China Film Group and Polybona. ICM Partners focuses on films with broader appeal than the Chinese market alone, even for local-language pics, and targets projects that can use Chinese and international talent. In addition, the agency works with the Shanghai Film Group, a film, animation and documentary production shingle under the giant Shanghai Media & Entertainment Group banner. ICM Partners’ client Rza recently completed shooting English-language pic “Iron Fists of Fury” in China.
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